Shares of the embattled Chinese property giant, Evergrande, have been suspended from trading on the Hong Kong Stock Exchange.
This development comes amidst reports suggesting that the company’s chairman, Hui Ka Yan (also known as Xu Jiayin), has been placed under police surveillance, adding another layer of uncertainty to the already crisis-hit firm.
The exact reason for the trading halt was not specified in the market statement released on Thursday. However, it follows a series of alarming developments for Evergrande, which has been grappling with a severe financial crisis.
Evergrande, once regarded as the world’s most valuable property developer, has been struggling with a staggering debt load exceeding $300 billion (£247 billion).
In 2021, the company defaulted on its debts, sparking concerns and turmoil in China’s real estate market, a sector that accounts for a significant portion of the nation’s economy.
Also Read: Evergrande Shares Plummet As Trading Resumes Amidst Real Estate Crisis
As the crisis deepened, Evergrande took the unprecedented step of filing for bankruptcy in the United States in August, as part of its efforts to protect its American assets while negotiating a multi-billion dollar deal with creditors.
This move marked a significant setback for the company and added to its troubles.
The suspension of trading in Evergrande shares in Hong Kong follows the lifting of a previous 17-month suspension just a month ago, highlighting the ongoing instability and uncertainty surrounding the firm’s financial health.
Evergrande’s troubles have sent shockwaves through the Chinese property sector, with many other major developers also facing financial difficulties and struggling to complete their projects.
The situation has had ripple effects on China’s economy, as the real estate industry contributes significantly to the nation’s GDP.
The company had been working on a repayment plan that involved reissuing its overseas debt as new bonds and offering stakes in the company as shares to creditors.
However, recent developments, including the default of its mainland unit Hengda Real Estate on a substantial debt, have raised concerns about Evergrande’s ability to resolve its financial woes.
The reported surveillance of the company’s chairman and the detention of some current and former executives have added further uncertainty to Evergrande’s future.
While the exact details of these reports remain unverified, they contribute to the ongoing crisis of confidence in the firm.
Analysts believe that the stress in China’s property sector will continue to pose credit risks in the near term.
Despite modest policy easing measures by the Chinese government, homebuyers’ sentiment remains subdued, raising concerns about the broader economic impact of the property crisis.
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